ndiddy_IHB
New member
but then if you're renting it....can't you not factor the tax write off since you're only suppose to be able to write off your primary residence?
Villages of Columbus - Columbus Square - Verandas
- Thread starter zovall_IHB
- Start date
patsox1975_IHB
New member
you can write off taxes and interest against the income generated by the property. you can also write off all other costs of repairs, travel etc that was incurred in maintaining this investment property as well. If your net income is less than cost, you can carry the losses forever, but it can only offset passive income, not W-2 income. If you sell the property for a gain, this net losses can offset that capital gain. And depending on income bracket, losses from passive property can even reduce your taxable income.
freedomCM_IHB
New member
but you cannot write off the mello roos, only the base rate.
and you are not going to get a 5% loan for non-owner occupied property.
and you better figure in 1 or 2 months a year vacancy.
run the numbers again, Tonto.
and you are not going to get a 5% loan for non-owner occupied property.
and you better figure in 1 or 2 months a year vacancy.
run the numbers again, Tonto.
patsox1975_IHB
New member
for that matter... 2800 rent is unlikely either. But you're missing the point. Point is whether or not 2800 is parity point. And it is (or close to it) if you're willing to pay 2800 rent for similar place. Rental parity doesn't mean at what point you'd buy a place as investment (rental) property, it means when would you be indifferent to owning vs renting.
ndiddy_IHB
New member
would this build be considered an average home? $2800 sounds so expensive for a condo even though it's 2000+sq feet.
Shooby_IHB
New member
FYI Verandas are single family detached homes, not condos.
roundcorners_IHB
New member
[quote author="patsox1975" date=1249972501][quote author="roundcorners" date=1249969144]I don't like the IHB calculator... here is what I have... $600k, 20% down - $120k, 5.1%, 30 Year fix; your mortgage alone is $2606... Total Taxes, 1.8% - approx 900/month, HOA $140, not including insurance, maintenance.. youre looking at approx: $3,646.16,,, not including tax savings... I say a little far from rental parity...</blockquote>
~$2000 of $2606 will be interest payment for first few years, $900 in taxes + $2000 in interest are tax deductible, so you're saving ~ $1000 in taxes. That should bring it rental parity if the place can really be rented for $2800. Tax savings are very significant and you cannot ignore it. If this were an investment property, then you'd be losing ~$800 a month (ignoring depreciation and no passive income to offset it), but you'd also be technically building equity of ~$500 a month - that seems like break-even too. But again I won't rent the place for 2800, and I doubt if anyone else will.</blockquote>
Below is your how much of your monthly is going to interest alone... don't count on the equity; go invest in the IE, forget about the OC for now...
months Running Balance Interest
1 $480,000.00 $2,040.00
2 $479,433.84 $2,037.59
3 $478,865.28 $2,035.18
4 $478,294.29 $2,032.75
5 $477,720.89 $2,030.31
6 $477,145.04 $2,027.87
7 $476,566.75 $2,025.41
8 $475,986.00 $2,022.94
9 $475,402.78 $2,020.46
10 $474,817.08 $2,017.97
11 $474,228.90 $2,015.47
12 $473,638.21 $2,012.96
~$2000 of $2606 will be interest payment for first few years, $900 in taxes + $2000 in interest are tax deductible, so you're saving ~ $1000 in taxes. That should bring it rental parity if the place can really be rented for $2800. Tax savings are very significant and you cannot ignore it. If this were an investment property, then you'd be losing ~$800 a month (ignoring depreciation and no passive income to offset it), but you'd also be technically building equity of ~$500 a month - that seems like break-even too. But again I won't rent the place for 2800, and I doubt if anyone else will.</blockquote>
Below is your how much of your monthly is going to interest alone... don't count on the equity; go invest in the IE, forget about the OC for now...
months Running Balance Interest
1 $480,000.00 $2,040.00
2 $479,433.84 $2,037.59
3 $478,865.28 $2,035.18
4 $478,294.29 $2,032.75
5 $477,720.89 $2,030.31
6 $477,145.04 $2,027.87
7 $476,566.75 $2,025.41
8 $475,986.00 $2,022.94
9 $475,402.78 $2,020.46
10 $474,817.08 $2,017.97
11 $474,228.90 $2,015.47
12 $473,638.21 $2,012.96
irvine_home_owner_IHB
New member
I think the point is still being missed about rental parity... if your net monthly outlay to own the home is roughly ~$2800... and the cost to rent a similar home is the same... do you buy it?
I still think the down payment is a sticking issue considering that if prices are still declining you will be losing that cash but it all depends on the motivation of the buyer/renter. Do they plan to stay there for a while (> 10 years)? Even if they think this is a starter home and they want to move up, there may not be any equity to do so... so unless they plan to stay for the long haul... rent.
I would not have sold my house if I knew that was where I wanted to be for the next 5-10 years. My payments were well above rental parity but had it been the place that had most of the things I wanted... we would have stuck it out.
I still think the down payment is a sticking issue considering that if prices are still declining you will be losing that cash but it all depends on the motivation of the buyer/renter. Do they plan to stay there for a while (> 10 years)? Even if they think this is a starter home and they want to move up, there may not be any equity to do so... so unless they plan to stay for the long haul... rent.
I would not have sold my house if I knew that was where I wanted to be for the next 5-10 years. My payments were well above rental parity but had it been the place that had most of the things I wanted... we would have stuck it out.
Perspective_IHB
New member
Qwerty, I think the mental toll a declining value causes, is very similar to the mental toll endured while renting and waiting for housing prices to decline. Also, I'm guessing you have a spouse who really wants to buy in Verandas now, regardless of further price declines. If that's the case, that also takes its toll. It's all very stressful.
Therefore, to be able to withstand and endure the toll future declines will generate, you should buy in Verandas now only if you can really afford it - meaning your total housing costs (mtg, int, taxes, HOAs) will be less than 30% of your gross monthly income and any other debt you have in addition won't exceed 33%. Otherwise, you will stress-out over any price declines and curse your decision.
My wife and I bought in Camden Place in mid-2007 and have endured an approximate 15-20% decline in value. My wife doesn't think too much of it, but it bugs me. However, our total housing cost is less than 25% of our gross monthly income. That provides plenty of cushion to save a good amount of cash so that we have options over the next few years; i.e. it provides comfort to offset the pain of the decline in value.
Therefore, to be able to withstand and endure the toll future declines will generate, you should buy in Verandas now only if you can really afford it - meaning your total housing costs (mtg, int, taxes, HOAs) will be less than 30% of your gross monthly income and any other debt you have in addition won't exceed 33%. Otherwise, you will stress-out over any price declines and curse your decision.
My wife and I bought in Camden Place in mid-2007 and have endured an approximate 15-20% decline in value. My wife doesn't think too much of it, but it bugs me. However, our total housing cost is less than 25% of our gross monthly income. That provides plenty of cushion to save a good amount of cash so that we have options over the next few years; i.e. it provides comfort to offset the pain of the decline in value.
qwerty_IHB
New member
[quote author="Perspective" date=1250233131]Qwerty, I think the mental toll a declining value causes, is very similar to the mental toll endured while renting and waiting for housing prices to decline. Also, I'm guessing you have a spouse who really wants to buy in Verandas now, regardless of further price declines. If that's the case, that also takes its toll. It's all very stressful.
Therefore, to be able to withstand and endure the toll future declines will generate, you should buy in Verandas now only if you can really afford it - meaning your total housing costs (mtg, int, taxes, HOAs) will be less than 30% of your gross monthly income and any other debt you have in addition won't exceed 33%. Otherwise, you will stress-out over any price declines and curse your decision.
My wife and I bought in Camden Place in mid-2007 and have endured an approximate 15-20% decline in value. My wife doesn't think too much of it, but it bugs me. However, our total housing cost is less than 25% of our gross monthly income. That provides plenty of cushion to save a good amount of cash so that we have options over the next few years; i.e. it provides comfort to offset the pain of the decline in value.</blockquote>
For me there is no mental toll while renting waiting for prices to come down - i can rent forever, as long as i live in a house i dont care if im paying my landlord or the bank, its the same to me, my wife will occasionally ask out loud why we are still renting, but i always manage to talk sense into her and then she is ok with renting again. For her its more of an emotional thing, she justs wants a house for the sake of being a homeowner. While i would also like to set roots down and buy a house, im not going to overpay for it. Fortunately, affordability for us is not an issue, we can afford much more and in much nicer parts of OC (newport etc), but i dont want to be dependent on two incomes to be able to afford a house. By buying a house on the equivalent of one income, it will give us flexibility should she want to take time off when we have kids and not dip into our savings.
Therefore, to be able to withstand and endure the toll future declines will generate, you should buy in Verandas now only if you can really afford it - meaning your total housing costs (mtg, int, taxes, HOAs) will be less than 30% of your gross monthly income and any other debt you have in addition won't exceed 33%. Otherwise, you will stress-out over any price declines and curse your decision.
My wife and I bought in Camden Place in mid-2007 and have endured an approximate 15-20% decline in value. My wife doesn't think too much of it, but it bugs me. However, our total housing cost is less than 25% of our gross monthly income. That provides plenty of cushion to save a good amount of cash so that we have options over the next few years; i.e. it provides comfort to offset the pain of the decline in value.</blockquote>
For me there is no mental toll while renting waiting for prices to come down - i can rent forever, as long as i live in a house i dont care if im paying my landlord or the bank, its the same to me, my wife will occasionally ask out loud why we are still renting, but i always manage to talk sense into her and then she is ok with renting again. For her its more of an emotional thing, she justs wants a house for the sake of being a homeowner. While i would also like to set roots down and buy a house, im not going to overpay for it. Fortunately, affordability for us is not an issue, we can afford much more and in much nicer parts of OC (newport etc), but i dont want to be dependent on two incomes to be able to afford a house. By buying a house on the equivalent of one income, it will give us flexibility should she want to take time off when we have kids and not dip into our savings.
Perspective_IHB
New member
[quote author="qwerty" date=1250252163][quote author="Perspective" date=1250233131]Qwerty, I think the mental toll a declining value causes, is very similar to the mental toll endured while renting and waiting for housing prices to decline. Also, I'm guessing you have a spouse who really wants to buy in Verandas now, regardless of further price declines. If that's the case, that also takes its toll. It's all very stressful.
Therefore, to be able to withstand and endure the toll future declines will generate, you should buy in Verandas now only if you can really afford it - meaning your total housing costs (mtg, int, taxes, HOAs) will be less than 30% of your gross monthly income and any other debt you have in addition won't exceed 33%. Otherwise, you will stress-out over any price declines and curse your decision.
My wife and I bought in Camden Place in mid-2007 and have endured an approximate 15-20% decline in value. My wife doesn't think too much of it, but it bugs me. However, our total housing cost is less than 25% of our gross monthly income. That provides plenty of cushion to save a good amount of cash so that we have options over the next few years; i.e. it provides comfort to offset the pain of the decline in value.</blockquote>
For me there is no mental toll while renting waiting for prices to come down - i can rent forever, as long as i live in a house i dont care if im paying my landlord or the bank, its the same to me, my wife will occasionally ask out loud why we are still renting, but i always manage to talk sense into her and then she is ok with renting again. For her its more of an emotional thing, she justs wants a house for the sake of being a homeowner. While i would also like to set roots down and buy a house, im not going to overpay for it. Fortunately, affordability for us is not an issue, we can afford much more and in much nicer parts of OC (newport etc), but i dont want to be dependent on two incomes to be able to afford a house. By buying a house on the equivalent of one income, it will give us flexibility should she want to take time off when we have kids and not dip into our savings.</blockquote>
It sounds like you have everything under control, which actually makes the decision more difficult to make. If you were like most other people, you'd just jump on the purchase using emotion as your guide, and if the value declines you'd then find someone else to blame.
However, you're rational and conservative (by today's standards).
If you're searching for reasons not to buy, there are plenty. I'll give you one about Verandas that concerns me - the new block being built right now has the front doors VERY close to the street. It's Irvine, I know, you don't get a front yard; but these look like you literally have just a few feet from the front door to the street. Cars are going down that street at 30 mph+ right now! I think they?ll need to install speed bumps shortly after these homes have people in them.
It?s a tough decision. Personally, when I have to make a tough decision, I try to defer to the side of freedom. Renting provides freedom. Freedom to watch further price declines from the sidelines. Freedom to move where ever nearly when ever. The cost of this freedom is just your rent.
Therefore, to be able to withstand and endure the toll future declines will generate, you should buy in Verandas now only if you can really afford it - meaning your total housing costs (mtg, int, taxes, HOAs) will be less than 30% of your gross monthly income and any other debt you have in addition won't exceed 33%. Otherwise, you will stress-out over any price declines and curse your decision.
My wife and I bought in Camden Place in mid-2007 and have endured an approximate 15-20% decline in value. My wife doesn't think too much of it, but it bugs me. However, our total housing cost is less than 25% of our gross monthly income. That provides plenty of cushion to save a good amount of cash so that we have options over the next few years; i.e. it provides comfort to offset the pain of the decline in value.</blockquote>
For me there is no mental toll while renting waiting for prices to come down - i can rent forever, as long as i live in a house i dont care if im paying my landlord or the bank, its the same to me, my wife will occasionally ask out loud why we are still renting, but i always manage to talk sense into her and then she is ok with renting again. For her its more of an emotional thing, she justs wants a house for the sake of being a homeowner. While i would also like to set roots down and buy a house, im not going to overpay for it. Fortunately, affordability for us is not an issue, we can afford much more and in much nicer parts of OC (newport etc), but i dont want to be dependent on two incomes to be able to afford a house. By buying a house on the equivalent of one income, it will give us flexibility should she want to take time off when we have kids and not dip into our savings.</blockquote>
It sounds like you have everything under control, which actually makes the decision more difficult to make. If you were like most other people, you'd just jump on the purchase using emotion as your guide, and if the value declines you'd then find someone else to blame.
However, you're rational and conservative (by today's standards).If you're searching for reasons not to buy, there are plenty. I'll give you one about Verandas that concerns me - the new block being built right now has the front doors VERY close to the street. It's Irvine, I know, you don't get a front yard; but these look like you literally have just a few feet from the front door to the street. Cars are going down that street at 30 mph+ right now! I think they?ll need to install speed bumps shortly after these homes have people in them.
It?s a tough decision. Personally, when I have to make a tough decision, I try to defer to the side of freedom. Renting provides freedom. Freedom to watch further price declines from the sidelines. Freedom to move where ever nearly when ever. The cost of this freedom is just your rent.
qwerty_IHB
New member
[quote author="Perspective" date=1250295790][quote author="qwerty" date=1250252163][quote author="Perspective" date=1250233131]Qwerty, I think the mental toll a declining value causes, is very similar to the mental toll endured while renting and waiting for housing prices to decline. Also, I'm guessing you have a spouse who really wants to buy in Verandas now, regardless of further price declines. If that's the case, that also takes its toll. It's all very stressful.
Therefore, to be able to withstand and endure the toll future declines will generate, you should buy in Verandas now only if you can really afford it - meaning your total housing costs (mtg, int, taxes, HOAs) will be less than 30% of your gross monthly income and any other debt you have in addition won't exceed 33%. Otherwise, you will stress-out over any price declines and curse your decision.
My wife and I bought in Camden Place in mid-2007 and have endured an approximate 15-20% decline in value. My wife doesn't think too much of it, but it bugs me. However, our total housing cost is less than 25% of our gross monthly income. That provides plenty of cushion to save a good amount of cash so that we have options over the next few years; i.e. it provides comfort to offset the pain of the decline in value.</blockquote>
For me there is no mental toll while renting waiting for prices to come down - i can rent forever, as long as i live in a house i dont care if im paying my landlord or the bank, its the same to me, my wife will occasionally ask out loud why we are still renting, but i always manage to talk sense into her and then she is ok with renting again. For her its more of an emotional thing, she justs wants a house for the sake of being a homeowner. While i would also like to set roots down and buy a house, im not going to overpay for it. Fortunately, affordability for us is not an issue, we can afford much more and in much nicer parts of OC (newport etc), but i dont want to be dependent on two incomes to be able to afford a house. By buying a house on the equivalent of one income, it will give us flexibility should she want to take time off when we have kids and not dip into our savings.</blockquote>
It sounds like you have everything under control, which actually makes the decision more difficult to make. If you were like most other people, you'd just jump on the purchase using emotion as your guide, and if the value declines you'd then find someone else to blame. However, you're rational and conservative (by today's standards).
If you're searching for reasons not to buy, there are plenty. I'll give you one about Verandas that concerns me - the new block being built right now has the front doors VERY close to the street. It's Irvine, I know, you don't get a front yard; but these look like you literally have just a few feet from the front door to the street. Cars are going down that street at 30 mph+ right now! I think they?ll need to install speed bumps shortly after these homes have people in them.
It?s a tough decision. Personally, when I have to make a tough decision, I try to defer to the side of freedom. Renting provides freedom. Freedom to watch further price declines from the sidelines. Freedom to move where ever nearly when ever. The cost of this freedom is just your rent.</blockquote>
Completely agree. The freedom of renting is so nice - its really hard to beat. Our lease is up in December then we go month-to-month so we will see again where the market is then. My guess is we will end up buying in 2010 (probably the second half).
Therefore, to be able to withstand and endure the toll future declines will generate, you should buy in Verandas now only if you can really afford it - meaning your total housing costs (mtg, int, taxes, HOAs) will be less than 30% of your gross monthly income and any other debt you have in addition won't exceed 33%. Otherwise, you will stress-out over any price declines and curse your decision.
My wife and I bought in Camden Place in mid-2007 and have endured an approximate 15-20% decline in value. My wife doesn't think too much of it, but it bugs me. However, our total housing cost is less than 25% of our gross monthly income. That provides plenty of cushion to save a good amount of cash so that we have options over the next few years; i.e. it provides comfort to offset the pain of the decline in value.</blockquote>
For me there is no mental toll while renting waiting for prices to come down - i can rent forever, as long as i live in a house i dont care if im paying my landlord or the bank, its the same to me, my wife will occasionally ask out loud why we are still renting, but i always manage to talk sense into her and then she is ok with renting again. For her its more of an emotional thing, she justs wants a house for the sake of being a homeowner. While i would also like to set roots down and buy a house, im not going to overpay for it. Fortunately, affordability for us is not an issue, we can afford much more and in much nicer parts of OC (newport etc), but i dont want to be dependent on two incomes to be able to afford a house. By buying a house on the equivalent of one income, it will give us flexibility should she want to take time off when we have kids and not dip into our savings.</blockquote>
It sounds like you have everything under control, which actually makes the decision more difficult to make. If you were like most other people, you'd just jump on the purchase using emotion as your guide, and if the value declines you'd then find someone else to blame.
However, you're rational and conservative (by today's standards).If you're searching for reasons not to buy, there are plenty. I'll give you one about Verandas that concerns me - the new block being built right now has the front doors VERY close to the street. It's Irvine, I know, you don't get a front yard; but these look like you literally have just a few feet from the front door to the street. Cars are going down that street at 30 mph+ right now! I think they?ll need to install speed bumps shortly after these homes have people in them.
It?s a tough decision. Personally, when I have to make a tough decision, I try to defer to the side of freedom. Renting provides freedom. Freedom to watch further price declines from the sidelines. Freedom to move where ever nearly when ever. The cost of this freedom is just your rent.</blockquote>
Completely agree. The freedom of renting is so nice - its really hard to beat. Our lease is up in December then we go month-to-month so we will see again where the market is then. My guess is we will end up buying in 2010 (probably the second half).
hs_teacher_IHB
New member
I think renting is great - it allows you flexibility to live in any place you choose. But I think owning is better. I feel that the longer we live in an area, the more roots you form with that neighborhood. I think that's a value that many fail to take into consideration. Personally, I've lived in Garden Grove, Westminster, Anaheim, Irvine, Fountain Valley, Santa Ana, and Tustin. Although it's been good experiencing all these different neighborhoods, it's about time I settle down into one... hopefully for at least 10 years.
On another note, I find the Verandas to be very nice homes. Being in a new neighborhood, I have no fear of safety concerns. At 600K for a home, I also find it to be fairly priced. But when it comes down to buying a home, I will definitely look into Fountain Valley. What's more important than safe neighborhoods, good schools, and a clean environment is being close to PEOPLE. Like Suze Orman says, it's always PEOPLE, MONEY, then THINGS. Being that the majority of my family and friends live around Fountain Valley, I have a strong incentive to buy there. A house is a THING - it's not as important as PEOPLE or MONEY.
I guess by the time you're 30, there's no need to explore a new neighborhood. Figure out where the most important PEOPLE in your life are and gravitate towards them. My family and friends live in Garden Grove, Westminster, Irvine, and Huntington Beach. I need to live in an area that is closest to the majority of them.
Although I currently live in Tustin and enjoy the safety of the neighborhood and the proximity to work, I hope I won't have to settle down here.
I'm beginning to resent all the people on this blog complaining about railroad noise, toxic plumes, and homeless shelters - they all seem so trivial. Don't you guys have family and friends? And when it comes down to it, shouldn't PEOPLE be the most important consideration in your life? Even concerns for home prices seem a little too much. I'm going to stick with my PEOPLE, MONEY, then THINGS.
On another note, I find the Verandas to be very nice homes. Being in a new neighborhood, I have no fear of safety concerns. At 600K for a home, I also find it to be fairly priced. But when it comes down to buying a home, I will definitely look into Fountain Valley. What's more important than safe neighborhoods, good schools, and a clean environment is being close to PEOPLE. Like Suze Orman says, it's always PEOPLE, MONEY, then THINGS. Being that the majority of my family and friends live around Fountain Valley, I have a strong incentive to buy there. A house is a THING - it's not as important as PEOPLE or MONEY.
I guess by the time you're 30, there's no need to explore a new neighborhood. Figure out where the most important PEOPLE in your life are and gravitate towards them. My family and friends live in Garden Grove, Westminster, Irvine, and Huntington Beach. I need to live in an area that is closest to the majority of them.
Although I currently live in Tustin and enjoy the safety of the neighborhood and the proximity to work, I hope I won't have to settle down here.
I'm beginning to resent all the people on this blog complaining about railroad noise, toxic plumes, and homeless shelters - they all seem so trivial. Don't you guys have family and friends? And when it comes down to it, shouldn't PEOPLE be the most important consideration in your life? Even concerns for home prices seem a little too much. I'm going to stick with my PEOPLE, MONEY, then THINGS.
sonicko_IHB
New member
[quote author="aero_guy" date=1249943245]I believe IR was talking about the Columbus Grove, not Columbus Square in regards to being close to the bottom. Columbus Square is not in Irvine School District, FYI.</blockquote>
I've had lunch a few times with him and we were talking about Square, not Grove.
For the rest the $2800 was based upon the fact that a 1500 sq ft attached townhome my friend is getting $2500 for. This is in Tustin but is larger and is detached which is getting me to around $2800. It may only fetch $2600 but it's still fairly close to rental parity.
I've had lunch a few times with him and we were talking about Square, not Grove.
For the rest the $2800 was based upon the fact that a 1500 sq ft attached townhome my friend is getting $2500 for. This is in Tustin but is larger and is detached which is getting me to around $2800. It may only fetch $2600 but it's still fairly close to rental parity.